Analysis: Shoppers may be spared worst of corn price surge

July 22, 2012|Martinne Geller | Reuters

As animals get more expensive to feed, Smith said they will get sent to market younger and smaller. That can boost the near term supply of meat, but it hurts supply later, when the animals would normally have come to market.

"Maybe you send (a cow to slaughter) at 800 lbs instead of 1200 lbs. That takes 400 lbs out of the market, but brings 800 lbs to the market sooner. So you see more slaughter ... then when we get to where those animals should be in the normal cycle, they're not there," he said.

Because of relative differences in how long it takes animals to reach maturity, Smith said he expects to see a price impact in chickens in about three months, pork in four to six months, and beef in about six to eight months.

It is still too early to call exactly what will happen with prices, since the drought and growing season are not over. But if the drought continues, and prices remain this high, cost-conscious carnivores may have few options for low-priced meat.

"I find it hard to believe that this magnitude of increase in costs, should it be sustained, won't lead to draconian cuts in supply and very strong pricing across all three meats, in which case there's not much to trade down to," Feeney said.